Pennsylvania’s high betting taxes and fees scare away sport bookies

The state of Pennsylvania has legalised sports betting, however, they haven’t exactly made themselves an attractive option for corporate bookmakers.

The costs of getting a permit and taking in bets may be so prohibitive that in-state casinos may not offer sports-betting services at all.

Dan Shapiro, the vice president of William Hill USA‘s business development, claimed that the license fee and the tax rate on sports bets certainly don’t make setting up camp in Pennsylvania a priority.

“With a 36 percent tax and a $10 million license fee, there are other states that are more interesting to us,” Shapiro said.

The tax rate and the fee licensing are way out of line with what other states offer. So what is behind Pennsylvania’s thinking?

The simple answer may be that they are trying to ensure that the government is a major beneficiary of sports-betting legalisation. However, when the sportsbooks won’t come to town they risk getting nothing at all.

Is Pennsylvania trying to deter sports betting with high taxation? If that was the case then why would they legalise sports betting in the first place when so many other states have dragged their heels?

It appears that Pennsylvania is betting on a bookmaker taking on the license, despite the high start-up costs. If that’s the case then there is a lot to consider in the big picture of casino revenue.

Casinos, venues that can legally offer sports betting, have numerous streams of income. If offering sports betting lures customers to a casino then it’s not just the losing bets that get added to the casino’s income.

Furthermore, any affiliated hotel would stand to gain too. From this point of view, if sports-betting profits don’t kick in right away due to the high fee and taxes, the casino could still claim success if there is a spill over to other areas.

But to pay for a $10M fee, that spill over would have to be huge and it will test how patient a casino wants to be before it sees profits from the investment.

If William Hill is saying the costs are too high it’s hard to imagine who out there will find them agreeable in the near future.